Originally appeared in:

February 2011, pgs 37-43.

Used with permission.

CLEAN FUELS SPECIALREPORT

Slurry-phase hydrocracking—
possible solution to refining margins
Opportunity crudes require more hydrogen addition to upgrade
orphan product streams into higher-value ‘clean’ products
M. MOTAGHI, B. ULRICH and A. SUBRAMANIAN, KBR Technology, Houston, Texas

R
efinery margins are complex topic; margins are subject to
substantial uncertainties and are impacted by global fluc-
tuations in regional feed and product pricing structures.
A conscientious analysis of historical data will indicate that for
every one good year, on average, refiners are subject to seven years
of depressed margins. New globalization trends, which include a
changing transport-fuel supply/demand balance, geographic shift
in consumption, soaring crude-oil prices, depressed natural-gas
prices and impending regulations, all pose interesting challenges
to the very survival of many small- and medium-sized refineries.
Definitions of profitability. A simple analysis of refinery
economics will reveal that margins are largely impacted by three
basic factors; crude cost, type of products produced and disposi-
tion of low-value, stranded streams. While the first two factors are
simple to understand, the relationship between the refiner’s ability
to handle these orphaned streams and margins is more complex.
Crude price. The cost of crude is the single most important fac-
tor in setting refinery margins. This is the primary reason for the
recent surge in refinery upgrades targeted at processing “opportu-
nity crudes.” While the definition of opportunity crudes is nimble
and can vary from refinery to refinery, for the purpose of this
article, it makes sense to simply define these crudes as the cheap-
est in monetizing heavy-oil reserves and the influx of substantial
heavy crude volumes to the marketplace suggests that in the long
run, refinery margins are likely to return, in large part influenced
by the restoration of the light-heavy differentials. Central to this
theory is that light-oil fields are on the decline and almost all new
crudes entering the market place are substantially heavier than
the current crude basket. This is evident by the decreasing API
as shown in Fig. 1, of the composite worldwide crude blend and
increasing volumes of extra-heavy crudes such as Canadian and
Latin American bitumens.
As the world’s supply of crude oil becomes heavier and con-
tains higher sulfur levels, the challenge to the refiners will be
compounded by the need to meet the growing demand for light,
high-quality, ultra-low-sulfur transportation fuels. This leads to
the next major determining factor that sets refinery margins, i.e.,
quality of products.
34 1.3
API gravity

Sulfur, %

est possible crude basket available to any given refinery on any

given day. This basket may consist of heavy or extra heavy crudes, 33 1.2
bitumen-derived crudes, high-acid/high-metals naphthenic crudes
or high metals-containing, paraffinic, heavy inland crudes.
Most refiners are limited in their ability to handle this wide
range of opportunity crudes; more often than not, they are con-
strained by the residues derived from these crudes. In recent
years, the surge in interest over resid upgraders was catalyzed by
the growing light-heavy differentials. This, in turn, forced refin- 32 1.1
ers to evaluate their bottoms processing technologies, as margins 1990 1995 2000 2005 2010 2015 2020 2025
Global petroleum outlook
dictated a higher percentage of heavy oils in their crude diet.
Although the large light-heavy differentials have since diminished, FIG. 1 Crude API trends, 1990–2025.
this phenomenon is likely to be temporary. The renewed inter-
HYDROCARBON PROCESSING FEBRUARY 2011
SPECIALREPORT CLEAN FUELS

Product quality. Global trends show a growing diesel demand
and stable-to-declining gasoline demand (Fig 2). As the world
emerges from the global recession and as the growth margin in
40% of the world’s population continues at a rapid pace, this
trend can only be expected to amplify. With the majority of exist-
ing refinery configurations slanted towards gasoline production,
the price differential between diesel and gasoline will widen over
the long haul, validating the market tilt towards dieselization.
In addition, regulatory demands will only accelerate the shift
towards lower density, higher-cetane index, ultra-low-sulfur die-
sel production, as the regional outlets for lower quality transport
fuels diminish.
This combination of lower cost “opportunity crudes” and the
need to produce high-quality distillate-selective products is an
important consideration for refiners, when making long-term,
high-dollar investment decisions.
Choices. The least understood variable in determining refin-
ery margins is the disposition of stranded streams. Refineries
are littered with low-value streams that are blended off, often
downgrading higher-value products for the sole purpose of
finding positive outlets for less saleable streams. While the abil-
ity to upgrade these streams is a major factor that sets refinery
complexity, the solutions for these streams often rests in under-
standing its potential applications and value within and outside
the refining industry.
The single largest stranded stream for most refineries is the
vacuum residue (VR). The bulk of the operating refineries around
the world have little or no residuum processing capability and
produce large volumes of high-sulfur fuel oil and bunker fuel. A
small volume is used to produce road asphalt. The future of VR
is, therefore, intrinsically tied to the future of these three outlets.
The large growth market for residues may appear to be the
35
Diesel
30
25
Price projection
bunker fuel market predominantly influenced by globalization
trends and consequential incremental trade and shipping traffic.
However, the use of VR as the major blending component in
bunker fuel will come under serious scrutiny as new maritime
regulations come in to effect starting in 2015 (Fig. 3). This will
significantly inhibit VR demands, and the eventual solution may
come from either the shipping or the refining industry.
While one of the solutions under debate involves using
onboard flue gas scrubbers, this issue is more complex. There are
several reasons to underscore the reluctance of the shipping indus-
try to take on the burden of these operating facilities. Regulatory
trends are almost always unidirectional, and the shipping industry
can only expect the sulfur oxide (SOx) regulations to extend to
nitrogen oxide (NOx), particulates, volatiles and other controls,
not to mention the added capital investment, operating cost,
monitoring and reporting requirements. Conversely, the refining
industry is unlikely to invest in expensive VR hydroprocessing
with the sole purpose of producing specification bunker fuels.
Regulation directs actions. The global trends show a sharp
decline in high-sulfur fuel oil demand (Fig. 4), driven mainly by
environmental regulations. While the sharp decline in fuel oil
prices seen through the mid part of this decade has been tempo-
rarily arrested by the installation of many cokers, a reversal can be
expected as regulatory pressures extend to the rest of the world. As is
evident from the crack margins, producing large volumes of fuel oil
will result in negative refinery economics and cannot be sustained.
Road asphalt is a relatively small market (Fig. 5), and envi-
ronmental pressures are also likely to force refiners to produce
specification-grade bitumens without resorting to air blowing.
While this may lead to investment in alternate technologies such
as solvent de-asphalting, the overall impact on the volume of
stranded VR or its pricing, will be minimal.
All of these factors lead to one obvious conclusion. Going
forward, high refining margins will depend upon the ability to
capitalize on opportunity crudes, while consistently producing
high-quality distillate-selective products from refinery residues.

Selecting the appropriate residue upgrading technology, therefore,

20 Gasoline is a critical part of this puzzle that will define the future of refining
15 and refinery margins.
10
5 Selecting residue upgrading technologies. To better
0 understand the technology options, one must recognize that VR, in
1990 1995 2000 2005 2010 2015 2020 essence, is defined by what is not VR. The quality and quantity of
VR is a function of crude selection and the lowest boiling impurity
FIG. 2 Demand for gasoline and diesel, 1990–2010.
contained within the resid fraction that shows up as the limiting
factor in the vacuum gasoil (VGO) fraction that is fed to a catalytic

5
Possible delay until 2025 12
Fuel oil demand, million bpd
Sulfur maxium content, %

4 10 Western hemisphere
Eastern hemisphere
3 Global 8
ECA 6
2
4
1 2 Source: Purvin & Gertz
0 0
2005 2010 2015 2020 2025 2030 1990 1995 2000 2005 2010 2015 2020 2025

FIG. 3 Expected timeline for IMO regulation enactment. FIG. 4 Declining oil demand trend, 1990–2015.

HYDROCARBON PROCESSING FEBRUARY 2011


hydrotreater, hydrocracker or fluid catalytic cracking (FCC) process.
The choice of resid conversion technology must be set by project eco-
nomics, preferred reaction chemistry and mechanism of conversion
aimed at reliably achieving the overall processing objectives.
We present seven questions that one would expect refiners to
ponder as they investigate the appropriateness of available tech-
nology options. The direct relevance of these questions is premised
on projected market trends and is intended to address the desire
to achieve and sustain high refinery margins:
1. Has the technology been demonstrated in one or more
large scale units?
2. Can the technology handle residues irrespective of the feed
quality?
3. Can the technology achieve near complete conversion on
a once-through basis?
4. Can the technology produce finished diesel-selective products?
5. Does the technology database demonstrate the ability to
handle a whole range of crudes?
6. Can the technology do all of this with high reliability?
7. Can the technology achieve all of this at an attractive net
present value (NPV)?
Aided by low crude oil prices and high natural gas prices, the
delayed coker has, thus far, been the technology of choice for resid
upgrading. When tested against the “seven questions” above, and
weighed against the prevalent market conditions of the past, the
conclusions are obvious.
However, going forward, with projected high crude oil prices,
low natural gas prices and diminishing outlets for low-grade
petroleum coke, the need for hydrogen addition is now here. In
the rest of this article, we will examine the landscape of the avail-
able resid upgrading hydrogen addition technologies against this
backdrop. As shown in Fig. 6, the technology choice for resid
hydroprocessing is inherently determined by the metals and Con-
radson Carbon Residue (CCR) content in the residuum.
Fixed-bed resid hydrocrackers. Fixed-bed technologies
have been used to hydrotreat residues containing low concentra-
tions of metals and CCR. In most cases, the operation of these
units is severely inhibited by the rapid deactivation of the catalyst
system. The resultant combination of high operating pressure, low
conversion, poor quality products and low catalyst cycle length
make the process capital intensive with limited overall benefits.
To improve the economics of fixed-bed resid hydrocrackers, the
unit must be protected from feed impurities. A feed cleanup unit
such as a solvent deasphalter (SDA) may be installed upstream of
the hydrocracker to reject the heaviest CCR and metals containing
fraction as a pitch stream.
2.5
Demand for asphalt, million bpd
Western Hemisphere
2.0
Eastern Hemisphere
1.5
1.0
0.5
Source: Purvin & Gertz
0.0
1990 1995 2000 2005 2010 2015 2020
FIG. 5 Demand for asphalt for road and roofing applications,
1990–2025.
HYDROCARBON PROCESSING FEBRUARY 2011
CLEAN FUELS SPECIALREPORT
The SDA works on the principles of solubility driven separa-
tion and is capable of lifting light deasphalted oil (DAO) from
resid feeds. For most crudes, especially the lower value opportu-
nity crudes, the overall lift will be low, limited by the CCR and
metal specifications set by the DAO hydrotreating catalyst.
As a result of the low DAO yield, the reject asphaltenic stream
will be large and can range from 50 wt%–80 wt% of the VR. For
refiners who lack an economic outlet for this pitch stream, the
value derived from the incremental distillate production through
hydroconversion of the DAO is negated by transportation and
handling costs associated with moving the pitch from the facility.
Thus, DAO derived from the vast majority of solvent deasphalters
operating in fuel services is directed to an FCC unit.
Fixed-bed resid hydroconversion processes will achieve mini-
mal overall resid conversion, will produce a large volume of fuel
oil, and are inherently limited by changing feed qualities. This
incompatibility is evidenced by high operating pressures, large
capital investments, low catalyst cycle length and a maintenance-
intensive operating history. The quality of the products will not
meet Euro V specifications, and the overall investment will not
be commensurate with the derived benefits. When tested against
the “seven questions to ponder,” it is obvious that fixed-bed resid
hydrocracking technology based schemes would need to be criti-
cally examined by the refiner on almost every issue.
Ebullated-bed hydrocrackers. Another option that has
been considered and practiced by refiners for resid conversion is
the ebullated bed technology. In this case, the same deactivation
phenomenon seen in fixed-bed technologies is inherent with
the one exception: the issue of low catalyst cycle length may be
resolved through continuous addition and removal of catalysts.
Every resid handling process is subject to asphaltene precipi-
tation as the saturates and aromatics contained in the feed that
hold the asphaltenes in solution are removed or converted. This
phenomenon is essentially driven by asphaltene-solubility chem-
istry, and the achievable conversion is a function of the saturates,
aromatics, resins and asphaltene content in the residue, which
in effect defines crude compatibility. In most cases, these units
operate at a nominal 55% to 75% conversion, and in an era of
“opportunity crudes”, this inherent limitation must be recognized.
20
18 Thermal processing or slurry phase
16
14
Ebullated bed or slurry-phase
Conradson carbon, %
12
10
8
Resid FCC
6
4
2
Fixed-bed hydrocracker
0
1 10 100 1,000 10,000
2025 Metals content, Ni + V ppm
FIG. 6 Resid upgrading technology options as directed by CCR %.
SPECIALREPORT CLEAN FUELS
Vacuum
residue
1st stg. Hot 2nd stg.
reactor separator reactor
Recycle gas
compressor
Additive
separator
Vacuum
H2 column
Makeup
compressor Fractionator
Residue
FIG. 7 Typical resid hydrocracker flowsheet.
While refinery economics dictate the need to operate at or near
the asphaltene-precipitation boundary limits, the operation of
these units can be fairly complex as the refiner balances the need
to operate at maximum conversion while minimizing reliability
issues associated with asphaltene-induced fouling.
With this narrow operating window, any changes in feed qual-
ity can contribute to higher maintenance costs and low onstream
factors. To achieve a relatively small overall improvement in resid
conversion, and to improve reliability, operators often limit once-
through conversion, recycle polynuclear aromatics (PNAs) and
add other external aromatic-rich streams to help solubilize the
asphaltenes, which, in turn makes the process more capital inten-
sive and will result in higher operating costs. Although these
processes are catalytic and use metal-containing catalysts, the con-
version chemistry is a blend of catalytic cracking and deactivation-
induced thermal cracking. Along with the addition of aromatic
external feeds, the chemistry will result in lower naphtha, diesel
and gasoil qualities requiring the streams to be re-hydroprocessed
to meet Euro V product quality specifications.
This need to add two catalytic steps makes the process capital
intensive, thus challenging the economics of this option. With
declining fuel-oil prices, and tightening fuel-oil quality regula-
tions, the large volume of unconverted fuel oil will leave the
refiner with much of the same issues to deal with in the post
investment scenario, although in a smaller scale. When tested
against the “seven questions to ponder,” the choice of crudes,
achievable conversion, product qualities, reliability and invest-
ment threshold gain significance.
Article copyright ©2011 by Gulf Publishing Company. All rights reserved. Printed in U.S.A.
Not to be distributed in electronic or printed form, or posted on a website, without express written permission of copyright holder.
refining.KBR.com
Slurry-phase hydrocrackers. With
high crude price and low natural gas prices
on the horizon, slurry-phase hydrocracking
Offgases
sulfur etc. (Fig. 7) is emerging as the preferred
approach for upgrading residue streams via
Gas hydrogen addition. The principles of slurry-
phase hydrocracking essentially overcome
cleaning
Cold
the limitations of fixed-bed and ebullated-
C4 bed technologies and provide for substan-
tially higher conversion of the residuum.
Naphtha The primary conversion of residues can
be achieved through either catalytic or non-
Middle
distillate catalytic routes. Investigations for using
catalysts or noncatalytic additive systems for
primary conversion of the residues can be
VGO
traced back to the early 1900s and span the
entire century, with several hundred patents
that have been awarded in support of these
activities. Over the past few years, substan-
tial effort has been expended by technology
providers exploring nanocatalysts to enable the primary conver-
sion of residues at marginally lower operating pressures. While
catalyst-based systems are technically viable, the use of a relatively
expensive catalyst system, catalyst deactivation, low quality of
derived products and the need for catalyst recovery, all contribute
to the economic considerations which in the authors’ view, is
likely to make this option less attractive.
Key performance criteria. We will focus on the non-
catalytic slurry-phase hydrocracking in the context of hydrogen
addition and examine the appropriateness of the technology to
the current market conditions. HP
Extended version avaiable online at HydrocarbonProcessing.com.
Mitra Motaghi is a process engineer with the KBR Technology business unit with
special focus on resid hydrocracking and VCC technology. She holds an MS degree
in chemical engineering from Texas A&M Kingsville.
Bianca Ulrich is a principal process engineer with KBR Technology business unit
with special emphasis on resid hydrocracking and VCC technology. She holds a BS
degree in chemical engineering from Georgia Institute of Technology.
Anand Subramanian is Vice President for new technologies with KBR Tech-
nology business unit and is responsible for the VCC technology. He has 24 years
of industry experience and 20 years with KBR in various process and technology
management positions.